Reuters News

12/11/2012 8:42:16 AM - Reuters News

By Susan Cornwell

WASHINGTON (Reuters) - Afghan officials are stonewalling U.S. efforts to help regulate the billions of dollars in cash being flown out of Kabul airport every year, a U.S. watchdog said in a report on Tuesday.

The officials are apparently not using cash-counting machines at the airport more than a year after they were provided by the U.S. government to try to get some oversight of the currency fleeing the country, said the report by the Special Inspector General for Afghanistan Reconstruction.

Afghan VIPs still get to bypass customs screenings altogether. In fact, a "Very, Very Important Person" lounge for high-ranking officials has been introduced at the airport in addition to the regular VIP lane, the report said.

U.S.-backed Afghan President Hamid Karzai has repeatedly pledged to curb corruption in order to keep attracting aid from international donors as a planned transition from U.S.-led NATO forces to Afghan leadership takes place by the end of 2014.

But capital flight from Afghanistan has continued, as wealthy Afghans tote suitcases of cash out to safe havens such as Dubai, threatening to erode Afghanistan's fragile economy and stability as foreign troops are leaving.

"Although proper controls to monitor cash flows are important for any country to institute, they are particularly critical for a country fraught with corruption, narcotics trafficking, and insurgent activity," it said.

An estimated $4.5 billion was taken out of Afghanistan in 2011, according to the U.S. Congressional Research Service. U.S. Treasury officials reported that about $1.3 billion in outbound cash was declared to Afghan Customs Department personnel at Kabul airport in 2010, including about $482 million in U.S. dollars.

In March, Afghanistan's deputy central bank governor estimated in an interview with Reuters that even more cash was pouring out of Afghanistan - some $8 billion a year, which he said was double the size of the previous year's budget.

The U.S. Congress has appropriated over $89 billion since 2002 for the reconstruction of Afghanistan, with more than half of the sum going to build the country's security forces. The watchdog's task is to monitor whether this U.S. aid has been well spent.

In addition to quarterly audits, the U.S. watchdog, which is headed by special inspector general John Sopko, has issued reports zeroing in on matters such as some mysterious record-shredding of fuel purchases for the Afghan army. Tuesday's report was another of these spot reports.

VERY VERY IMPORTANT PERSONS

Responding to reports of mass currency flight from Afghanistan, the United States has been trying since 2010 to help track the flow of cash leaving Kabul airport, training Afghan officials in customs procedures as well as helping institute controls for passengers, cargo and baggage.

But watchdog investigators who visited the airport in September found two cash-counting machines delivered by the U.S. government in 2011 tucked away in a small closet-like space "not easily accessible" to Afghan customs officials who were supposed to be tallying cash carried by travelers.

The U.S. investigators did not see anyone using the bulk currency counters, which are also designed to record currency serial numbers, create databases, and process up to 900 bills per minute.

The machines were not hooked up to the Internet as they were supposed to be, so that even if they were used to count cash, the data they collected could not be transferred to Afghan authorities.

U.S. officials running the program under which the bulk cash counters were installed told the watchdog that their efforts were at a standstill, the report said.

One Homeland Security official said Afghan customs officials at the airport "were afraid that they would experience negative repercussions" from the Afghan government if controls were instituted, it said.

No bulk currency counter was available for VIPs, who do not undergo customs or security screenings. "A new Very Very Important Persons (VVIP) lounge was built to provide easier boarding access for high-ranking officials, again allowing transit without main customs screenings or use of a bulk currency counter," the report said.